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Emmanuel Onwubiko: interrogation on the loan of the IMF of 3.4 billion dollars

“Instead of going to bed without dinner, you get into debt”, – Benjamin Franklin.

First of all, I must confess that there is absolutely nothing wrong or unpleasant in the lending of responsible creditors with transparent payment terms, provided that the amount of money borrowed is reinvested in profitable companies and projects that return the amount. borrowed and generate higher earnings for the borrower and citizens.

Furthermore, Nigerians of all affiliations, educated in economics or not, should be aware that since the 1980s Nigeria has had a record of cadres with international creditors such as the World Bank, the International Monetary Fund (IMF) and those multilateral creditors such as clubs in London and Paris.

There were classic debates that took the lead in the public speech during the military administration of the then self-proclaimed president, the four-star general Ibrahim Badamasi Babangida (rtd) on the need or not for STRUCTURAL REGULATION PROGRAMS that were attached as prerequisites for the collection of the IMF loan package then.

As school children recently interested in following current affairs through the pages of some of the renowned newspapers and later as Concord newspapers; Champion newspapers; Punch; Guardian; Tribunes and Vanguard Newspapers, the debate on whether or not the IMF loan was open occupied the front pages.

Even in our early years in high school, just before Babangida expelled the then sovereign general Muhammadu Buhari and founded his board of directors of the armed forces, the administration of General Buhari also carried out the AUSTERITY PROGRAM during which it was difficult to obtain the basic necessities of supermarket life due to inflationary trends and unplanned national economic development.

So, as a people and as a nation, we have had to fight the bad scenarios associated with borrowing from these multilateral financing institutions.

On August 1, 2005, there was a fascinating report that captured these various ramifications of the economic downturn caused by the insatiable appetite of Nigerian rulers for foreign loans which ended up being substantially misled by officials of the federal and state government.

The executive summary of that enlightening and enlightening report stated that: “Intense internal pressure has convinced Nigerian President Olusegun Obasanjo to seek an agreement that eliminates the country’s debt of $ 31 billion with the governments of the United Kingdom, France and other aids. . countries that use the Paris Club process to restructure the debt that countries cannot pay. ”

“The Paris Club’s creditors have proposed an unprecedented transaction, their first redemption discount, which would have paid off Nigeria’s debt to them in exchange for a cash payment of around $ 12 billion.”

However, the deal is not yet closed. Nigeria must first obtain IMF approval for its economic reform program under a structure that will be created in September; so you need to understand the remaining details of the Paris Club deal. Getting through these obstacles without tripping over will not be easy and will require exceptional patience and understanding on both sides. ”

For reasons of objectivity, it will be good to say that the era of the then president Olusegun Obasanjo came out of Nigeria from the notoriously indebted nation’s club through the skill and experience of the world-renowned financial authority in the person of Professor Ms. Ngozi Okonjo Iweala, who negotiated friendly terms for the repayment of the PARIS / LONDON club loans, returned Nigeria to first place as a nation with a clean slate or a clean health statement.

Nigeria maintained a healthy history as a somewhat prosperous country and was not influenced by foreign loans until the administration led by Muhammadu Buhari was born in 2015.

The prolific writer, Mr. Reno Omokri, who was the president’s special press assistant, Dr. Goodluck Jonathan, made the same comment that is out of the question when he wrote the following: “Former President Jonathan has left General Buhari $ 2.07 billion in excess oil account as of May 29, 2015 Only $ 71 million left today. He left nearly $ 3 billion in the Sovereign Wealth Fund. Buhari has dried it up today. Buhari raises our external debt by $ 7 billion. at $ 27.3 billion.

What did you use the money for? And now that oil has collapsed, does General Buhari want to borrow another $ 3.4 billion? What will Nigeria do? Buhari has plunged us into debt which will be almost impossible to pay. This man is a lobster. A perpetual beggar. An inexpensive almajiri. Consume what other men have produced without adding value. ”

Well, we even separate from the political currents and insults / unfathomable insults behind the claims made by Reno Omokiri, but what is as solid and coherent as the stars of the North is that these figures he has listed are objectively accurate and contained in the delivery of notes delivered to the administration led by President Muhammadu Buhari.

The cruel truth is that the administration led by Muhammadu Buhari has gone badly in the area of ​​accumulating national wealth and prosperity, but has focused on borrowing from all kinds of places to use to serve huge wages. of the many officials and politicians who parade. about as members of the federal government. Buhari’s Minister of Functionality, who lacks the authoritarian pedigree required like most other renowned finance ministers, signaled his mandate with the notoriety of the “loan finance minister”.

The difficult fact of the current Ministry of Finance and Budget is that the main source of income generation, which is the crude oil sector, has been handled so poorly that it has recorded annual deficits and losses since 2015.

The Nigerian customs and Federal Internal Revenue Service generated tons of money on propaganda-infested news pages, but were unaware that the government was continuing to lend.

It has just borrowed from the dreaded International Monetary Fund (IMF) and revenue may not have been accounted for transparently by the governmental environment since 2015.

The government is willing to borrow more.

What’s worse is that the rubber-stamped National Assembly led by Ahmed Lawan, a political boyfriend of President Muhammadu Buhari, has already accelerated government approval of the plan to borrow up to $ 27 billion from all types of creditors.

Nigerian Finance Minister Zainab Ahmed indicated that the government is in talks with the World Bank, the International Monetary Fund and the African Development Bank to raise $ 6.9 billion through external loans.

He said that the amount is in the form of subsidized funds to support the implementation of the 2020 budget.

In a breakdown of $ 6.9 billion, Ms. Ahmed said they would get $ 3.4 billion from the IMF, $ 2.5 billion from the World Bank and $ 1 billion from the AfDB.

The IMF board of directors unanimously approved this loan application. A confirmation from the media is on the multilateral funders’ website.

The IMF has approved $ 3.4 billion in emergency financial aid from the Rapid Funding Facility to support the authorities’ efforts to address the serious economic impact of the COVID-19 shock and the sharp drop in prices. of oil.

Following the Board of Directors’ discussion on Nigeria, Mitsuhiro Furusawa, Deputy Director-General and Acting President, released the following: “Immediate action by the authorities to respond to the crisis is welcome. Short-term focus on tax settlement it would allow for greater healthcare spending and help alleviate the impact of the crisis on households and businesses. Steps towards a more unified and flexible exchange rate are also important and the unification of the exchange rate should be accelerated. ”

The truth is that the federal government of President Muhammadu Buhari has not been adequately accountable and transparent in the deployment of public finances, even when public procurement is shrouded in secrecy and an official bureaucratic red carpet obscured by official corruption. on a large scale.

So when we look to the future of Nigeria in the future with these loans accumulated by the current government-run President Muhammadu Buhari, what directs us in the face is a gloomy future.

Recall my claim that Nigeria has been hindered for years by huge loan repayment problems.

There is this fascinating documentation on the debt service quagmire I have found.

The report goes like this: “The problems of Nigerian debt service began around 1985, when the Nigerian government’s total external debt to all creditors was $ 19 billion. Since then, the government has paid more creditors of $ 35 billion and loaned less than $ 15 billion. However, his outstanding foreign debt at the end of 2004 grew to nearly $ 36 billion. ”

A researcher from the University of Agriculture Michael Okpara wrote a beautiful document entitled; “Management dynamics in the knowledge economy Vol. 7 (2019) n. 3, pages 2991-306; DOI10.25019 / MDKE / 7.3.01
ISSN 2392-8042 (online) “.
Interestingly, this academic noted that external debt has continued to represent one of the main challenges for low-income nations such as Nigeria due to the constant budget deficit, the unfavorable balance of payments and, above all, the inevitable need of industrialization.

Citing the work of Professor Charles Soludo (2003) who states that the adverse balance of payments and the budget deficit are the two main problems that lead to the acquisition of foreign loans, the author stated the following: “When the nations at Low Income Are Faced with this dilemma, they have no choice but to turn to international financial institutions and bilateral leaders for loans.

When such loans are acquired by a nation, debt service becomes on the agenda and, if not managed well, the initially expected economic growth will be powerful in the process, the author suggested.

The researcher also said that: “Nigeria’s external debt was born in 1958 when a $ 28 million loan was obtained from the World Bank to build a railroad and other development projects (Ndekwe, 2008). In 1985, the services problem Debt started when Nigeria’s total external debt rose to $ 19 billion, but the government was able to pay foreign creditors (Paris Club) over $ 35 billion, while the money lent was then lower for $ 15 billion (Rieffel, 2005) “.

Knowing the above, it is easy to risk guessing that President Muhammadu Buhari has again dragged Nigeria into the infamous club of heavily indebted nations.

Can we question this government to tell us what happened to the revenue generated since 2015 by the various revenue generating agencies?

Can we question this government about why it has mismanaged the Nigerian National Petroleum Corporation to become a basketball case since 2015?

As reported by The Guardian, the Nigerian National Petroleum Corporation (NNPC) reported losses in the N551.46b region from January 2015 to December 2018.

As reported, the details of the financial records published on the company’s website revealed that the national oil company has repeatedly failed to deliver the expected profits such as its subsidiaries, in particular refineries, headquarters operating costs and other weapons left behind. huge deficits.

The company recorded a loss of N267.14b in 2015. The figure stood at N197b in 2016. In 2017, its balance sheet data showed operating losses of N82b, while a deficit of N5.46b was recorded for January and August. from 2018.

While the company has ruled out key details, such as Nigeria Liquefied Natural Gas (NLNG) Ltd’s taxes and figures, it has not worked consistently compared to other domestic oil companies in Africa and other parts of the world.

Although the company recorded a trade surplus of N80.57 billion last year, the operating deficit recorded only by the nation’s refineries increased by 39% to N132.5 billion in 2018.

Compared to the previous year, the data showed that the refineries recorded a loss of N95.09b.

While the company gained 2,046 tons in 2015, it spent N2.313t leaving a loss of N267.138b. Its headquarters registered the largest loss of N162.736b, while its supply and distribution arm for products, the Pipe and Product Marketing Company (PPMC) came in second with a loss of N162.06b, followed by a combined loss. from N82.09b of its three refineries. .

In 2016, the financial and operating report showed that the company had gained 1,726 tons, but had recorded an expense of 1,923 tons. Only the losses of its refineries amounted to N78.95b.

Most of the company’s losses over the past four years come from its headquarters, refineries and the growing recovery of imports of petroleum products.

However, while the country is struggling to declare profits, Arambo from Saudi Arabia recorded net income of $ 33.8 billion in the first six months of 2017 only. Sonangol, from Angola, reported a profit of $ 68 million in 2016. A Despite paying $ 853 million in damages in the third quarter, Brazilian Petrobras made $ 7 billion in 2018.

Readers will agree with me that this is not a healthy story about running a company. The NNPC has become the actual VAC that politicians spend during the election to bribe voters and the Independent National Electoral Commission (INEC).

Combining all these statistics, my opinion, therefore, is that the board of governors of the International Monetary Fund (IMF) approving the $ 3.4 billion loan to be given to government politicians who lack transparency and accountability for the government. deployment of public finances has caused irrevocable damage to Nigeria because this huge money will not be invested in the construction of well-equipped hospitals equally distributed between the 36 states of the Federation and Abuja, but the money will inevitably be stolen or used for politics.

Can we ask where is the scheme developed by this government on the transparent deployment of these IMF dollars that will fall on the Nigerian Central Bank which has already allowed the value of the national currency to have a free fall when exchanged for dollars?

Mind you, CBN lacks operational independence and governance like most other central banks in advanced economies. Therefore, there is no guarantee that CBN will prevent politicians from plunging their dirty hands into our national treasury to satisfy their insatiable appetite for the messy profit of the political office. This is the sad reality, but the IMF will be happy that Nigeria continues to depend on loans.

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